Chapter 13

Complaints and
Service
Recovery
Management
 Chapter Objectives

• Discuss the psychology of complaining behavior, including the types

of complainers and the types of complaints.
• Explain customer complaining behavior with regards to the reasons
customers do or do not complain, and the outcomes associated with
customer complaints.
• Describe the organic and mechanistic steps involved in developing
a service recovery management program.
• Understand the value of tracking and monitoring service failures and
employee recovery efforts.
• Discuss the basic rules of thumb of the art of service recovery.

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Opening Vignette: Hell Now Hath No Fury Like a
Customer Scorned!

• There are countless examples of situations where customers

received poor customer service and the firm’s inadequate response
actually exacerbated the failure situation
• Customers have taken justice into their own hands and become
consumer activists
• BusinessWeek devoted a recent cover story to Consumer Vigilantes
with the tagline: “Memo to Corporate America: Hell now hath no fury
like a customer scorned”
• One ignored Comcast customer visited the office and after waiting for
two hours without seeing a manager, came back with a hammer and
smashed a computer keyboard and telephone
• Another uploaded a video of him smashing his nonworking Macbook
to smithereens with a sledgehammer

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Introduction

• Despite a service firm’s best efforts,

unhappy customers are inevitable
• The secrets to win over unhappy
customers are to take a proactive stance to
reduce the occurrence of service failures
and to equip employees with a set of
effective service recovery tools to repair
the service experience when failures do
occur
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Psychology of Customer Complaining
Behavior

• Customers are not prone to “forgive and forget”

when it comes to customer service failures
– Results of a survey found that:
• The vast majority of respondents (87 percent) indicated that
they were still somewhat or very emotionally upset, and were
more upset about the treatment they received from
employees than about the store or product performance
• More than three-quarters of respondents indicated they had
engaged in negative word-of-mouth communications
regarding the incident
• Only 53 percent had voiced their complaint to the store, even
though 100 percent defected to other firms

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Psychology of Customer Complaining
Behavior (cont’d)

• Companies should encourage their

customers to complain
– Complainers are telling the firm it has some
operational or managerial problems that need
to be corrected
– Complainers provide the firm with the chance
to reestablish a customer’s satisfaction
– Complainers are more likely to do business
with the firm again than are noncomplainers

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Types of Complaints
• Instrumental complaints: complaints expressed for the purpose of
altering an undesirable state of affairs
– Example: complaining to a waiter about an overcooked steak
• Noninstrumental complaints: complaints expressed without
expectation that an undesirable state will be altered
– Example: complaints about the weather (“It’s too hot!”)
• Ostensive complaints: complaints directed at someone or
something outside the realm of the complainer
– Example: “The chef overcooked this steak!”
• Reflexive complaints: complaints directed at some inner aspect of
the complainer
– Example: “I wasn’t clear about how I wanted my steak to be prepared.”

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 Types of Complainers
1. The Meek Customer
– A customer who generally never complains
2. The Aggressive Customer
– A customer who complains on a regular basis, often at length and often
loudly enough for everyone else to hear
3. The High-Roller Customer
– A customer who expects the best and is willing to pay for it
4. The Rip-Off Customer
– A customer who wants more than they’re entitled to receive
5. The Chronic Complainer Customer
– A customer who is never satisfied yet continues to return

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 13.1: Why Customers “Do” and “Don’t”
Complain?

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Complaining Outcomes

• Voice: a complaining outcome in which the consumer

verbally communicates dissatisfaction with the store or the
product
– High voice: the communication is expressed to the manager or
someone higher in the organizational hierarchy than the actual
provider
– Medium voice: occurs when the consumer communicates the
problem to the person providing the service
– Low voice: occurs when the consumer does not communicate the
problem to anyone associated with the providing firm, but may be
relaying the problem to others outside the store

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Complaining Outcomes (cont’d)

• Exit: a complaining outcome in which the consumer

stops patronizing the store or using the product
– High exit: occurs when the consumer makes a conscious
decision never to purchase from the firm or buy the product again
– Medium exit: reflects a consumer’s conscious decision to try not
to use the service firm again if at all possible
– Low exit: the consumer does not change his or her purchasing
behavior and continues to purchase the firm’s services as usual

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Complaining Outcomes (cont’d)

• Retaliation: a complaining outcome in which the

consumer takes action deliberately designed to damage
the physical operation or hurt future business
– High retaliation: the consumer physically injures the service
provider or damages the firm, or goes out of his or her way to
communicate negative aspects about the business to others
– Medium retaliation: the consumer creates minor inconveniences
for the firm or perhaps tells only a few people about the incident
– Low retaliation: involves no retaliation at all against the provider or
firm, and perhaps consists of only minor negative word of mouth

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Developing a Service Recovery Management
Program

• By formalizing a service recovery management

program, firms can develop a step-by-step
process consisting of both mechanistic and
organic components
• Mechanistic processes: formalized step-by-step
processes that are developed to facilitate the
firm’s failure analysis and service recovery efforts
• Organic processes: informal sets of values and
beliefs that comprise the firm’s service recovery
culture

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 13.2: Developing a Service Recovery
Management Program

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Developing a Positive
Internal Recovery Culture

• Service recovery culture: an informal set of beliefs,

behaviors, and practices that set the tone of how the firm
wishes to address customer complaints
– A positive internal recovery culture:
• Reflects the supportiveness of the firm’s internal environment with
respect to complaint handling
• Consists of top managers:
– Recognizing that service failures do occasionally occur
– Providing the training and tools necessary for service personnel to
recover effectively from service failures
– Making service recovery a top priority for the firm

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 13.3: The Four Types of Service Failure
Identification

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 Service Failure Identifications

• Core service failures: failures in the core service offering of the firm,
including:
– Unavailable service
– Unreasonably slow service
– Other core service failures
• Failures relating to customer needs and requests: service failures
relating to the implicit and explicit needs of customers, including:
– Special needs
– Customer preferences
– Customer errors
– Disruptive others

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Service Failure
Identifications (cont’d)

• Failures relating to unprompted/unsolicited employee actions: failures

relating to:
– Level of attention
– Unusual employee actions
– Violations of cultural norms
– Gestalt
– Responses to adverse conditions
• Failures relating to problematic customers: failures relating to the customer’s
own misbehavior, including:
– Drunkenness
– Verbal and physical abuse
– Violations of company policies
– Uncooperative customers

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 Service Failure Attribution: Identifying the Root
Cause

• Locus: a service failure attribution pertaining to the

possible source of the failure including:
– The service provider
– The firm
– The customer
– External forces
• Stability: a service failure attribution pertaining to the
likelihood the service failure will recur
• Controllability: a service failure attribution pertaining to
whether or not the firm had control over the cause of the
failure

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 Recovery Strategy Selection
• What should the customer receive to offset the failure?
– Compensatory strategies: a set of recovery strategies that compensate the customers to offset
the costs of the service failure
• Gratis (free/good service)
• Discount
• Coupon
• Free upgrade
• Free ancillary product
– Restoration strategies: a set of recovery strategies offered to offset the current failure situation
by providing an identical offering, corrections to the original offering, or by offering a substitution
– Apologetic strategies: a set of recovery strategies involving apologies from front-line providers
and/or upper-level management
– Reimbursement strategies: a set of recovery strategies that provide the customer with a refund
or store credit
– Unresponsive strategies: a recovery strategy in which the firm purposely decides not to
respond to customer complaints

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 Recovery Strategy Implementation

• How should the recovery strategy be presented to the customer?

– Perceived justice: the process in which consumers weigh their inputs
against their outputs when forming recovery evaluations
– Consists of three components:
1. Distributive justice: a component of perceived justice that refers to the
outcomes (e.g., compensation) associated with the service recovery process
2. Procedural justice: a component of perceived justice that refers to the
process (e.g., time) the customer endures during the service recovery
process
3. Interactional justice: a component of perceived justice that refers to human
content (e.g., empathy, friendliness) that is demonstrated by service
personnel during the service recovery process

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 Providing Feedback to Employees

• Role conflict: situation in which the employee is caught

between the opposing wishes of the firm’s customers and
the firm’s management
• Role ambiguity: a situation in which the employee does
not know how to perform his or her job
• Employees need training and feedback
– About the types of service failures and failure attributions likely to
happen
– About the types of recovery strategies available to them
– About the manner in which recovery strategies should be offered
– To reinforce the firm’s positive service recovery culture

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Art of Service Recovery:
Basic Rules of Thumb

• Service recovery paradox: a situation in

which the customer rates performance
higher if a failure occurs and the contact
personnel successfully recover from it than
if the service had been delivered correctly
in the first place

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Art of Service Recovery:
Basic Rules of Thumb (cont’d)

• Measure the costs

– The costs of obtaining new customers are three to five times greater than
those of keeping existing customers
• Actively encourage complaints
– The average company does not hear from 96 percent of its unhappy
customers
• The average unhappy customer voices his or her displeasure to 11 other
people
• If these 11 tell 5 other people, the firm has potentially lost 67 customers
– Strategies to encourage complaints include customer surveys, focus
groups, and actively monitoring the service delivery process

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Art of Service Recovery:
Basic Rules of Thumb (cont’d)

• Anticipate needs for recovery

– Take every step possible to minimize the occurrence of service
failure
– Be prepared for recovery if delivery goes awry
– Pay special attention to areas in which employee turnover is high
• Train employees
– Create employee awareness of customer concerns
– Define management’s expectation about recovery efforts
• Empower the front line

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Art of Service Recovery:
Basic Rules of Thumb (cont’d)

• Respond quickly
– If the complaint is handled promptly, the
company will retain 95 percent of its unhappy
customers
– If the complaint is resolved at all, the firm
retains only 64 of unhappy customers
• Close the loop
– Provide feedback to the customer about how
that customer’s complaint made a difference

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.